Asian Supply Chain Intelligence From UPS and IDC: Risk and New Regions on the Rise (Part 1)

With a good number of AMR Research analysts having left Gartner following the acquisition and integration of the firm, there's been a void in core supply chain research among the larger shops. There are many small firms and research sources, ranging from Ann Grackin and Bill McBeath at ChainLink to Bob Ferrari at Supply Chain Matters, who have done a commendable job not just filling a void, but providing solid and broad operational coverage in their own right -- and in their own voice. But one firm we don't hear too much about in the supply chain sector is IDC's Manufacturing Insights, which arguably has the most resources behind it besides Gartner. Our sources suggest that much of IDC's focus is on consulting or custom research, which is perhaps why they're not making as big a name for themselves on an influence level as AMR used to. Yet some of the work they're up to -- custom or not -- is certainly insightful, including a recent UPS-sponsored research study examining changes in the Asian supply chain.

According to UPS, which hired IDC to conduct the fieldwork and analysis, the study is designed to "measure the impact of industry changes and challenges on the high-tech supply chain." The latest installment, covering the Asian market, surfaced some useful although not surprising findings. For one, the study suggests that we'll see a small shift away from China as a sourcing focus in three to five years time. Currently, 66% of respondents report sourcing from the region. This is expected to drop to 64% in the coming years. Sourcing levels coming out of Japan are slated decline further to 46% (from 51%), and the "Mature Asian Pacific" countries, including Thailand, Malaysia, Hong Kong and Singapore" are expected to rise to 50% (from 42%) in the same time period.

Curiously, North American sourcing is also expected to rise during the period, up roughly 40% (from 14% to 19%). In addition, the results are calling for an increasing percentage of regional spend going to developing markets rather than established ones. For example, whereas today, "16% of high-tech companies said they currently source from emerging APAC markets like the Philippines and Vietnam...24% plan to source supplies from these emerging countries in the next 3-5 years." Which perhaps, in part, explains the prioritization of supply risk management as the top supply chain priority for executives in the region -- a topic we'll explore in the next installment of this series.